AN ANALYSIS OF MARKETING & COMPETITIVE

Altius Shodh Journal of Management and Commerce
ISSN 2348 – 8891
AN ANALYSIS OF MARKETING & COMPETITIVE STRATEGIES ADOPTED
BY HINDUSTAN UNILEVER LIMITED IN RURAL AREAS
**Prof. Rajesh Jain, **Dr. D.N. Purohit
*Assistant Professor, Department of Commerce, IPS Academy, Indore
**Professor, Department of Commerce, GACC, Indore
Abstract
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer goods company, touching the lives of
two out of three Indians with over 20 distinct categories in House & Personal Care Product and Food &
Beverages. They endow the company with a scale of combined volumes of about 4 million tones and sales of
Rs. 14000 crores. They are manufactured over 53 factories across India. The operations involve over 3700
suppliers and associates. HUL's distribution network comprising about 6800 redistribution stockiest, covering
8.4 million retail outlets reaching the entire urban population and about 390 million rural consumers. The main
objective of this study is to find what the steps of Hindustan Unilever Ltd. are is adopting to be market leader
and to differentiate itself from its competitors. Excluding the onetime gains, the company's net profit rose
21%. HUL with revenues of Rs. 6284.75 crore and a net profit of Rs. 1024.38 crore in the current year In
recent years, the FMCG sector declined due to down trading. The new Hindustan Lever see an exciting opportunity
for growth. They have 41 powerful brands covering all segments, with leading market positions in most.
Today, these are stronger and more relevant to the consumer than ever. The scale of the business and operations
gives them the resources needed. They are delivering good services and the changes they brought in the
products are well taken by the customers, by this they are generating sustainable profitable growth.
Keywords: stockist, segments, FMCG, sustainable, redistribution.
Introduction:
As competition heats up, India’s top consumer-products
company woos affluent shoppers with global brands like
Dove. Hindustan Unilever Limited (HUL) is India’s largest
Fast Moving Consumer goods company, touching the lives
of two out of three Indians with over 20 distinct
categories in House & Personal Care Product and Food &
Beverages. They endow the company with a scale of
combined volumes of about 4 million tones and sales of
Rs. 14000 crores. HUL is also one of the country’s largest
exporters; it has been recognized as a Golden Super Star
Trading House by the Government of India. HUL’s brandslike Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely,
and Kissan – are household names across the country
and span many categories – soaps, detergents, tea and
other products. They are manufactured in over 53
factories across India. The operations involve over 3700
suppliers and associates. HUL’s distribution network
comprising about 6800 redistribution stockiest, covering
8.4 million retail outlets reaching the entire urban
population and about 390 million rural consumers.HUL is
not only focusing on health & hygiene education, women
empowerment and water management but also involved
in education and rehabilitation of special or
underprivileged children, care for the destitute and HIVpositive and rural development.
Review of Literature:
According to Pradeep Tognatta (2012) , the economic
growth in India’s agricultural sector in last year was over
7.28% , compared with 3.54% in the industrial sector. This
implies a huge market potentiality for the marketer to meet
up increasing demand. According to Kotler (2010) also
defined satisfaction as a person’s feeling of pleasure or
disappointment resulting comparing a products perceived
performance in relation to his or her expectations.
Satisfaction is an overall customer attitude towards a service
provider or an emotional reaction to the difference between
what the customer anticipate and what they actually receive,
as far as the fulfillment of some need, goal and desire is
concerned. Christopher, Payne and Ballantyne (2008) have
defined service quality as the ability of the organization to
meet or exceed customer expectations. Service quality is
believed to depend on the gap between expected and
perceived performance.
Rationale of Study:
HUL started project Shakti in 2001 with the aim of increasing
the company’s rural distribution reach simultaneously
prov iding rura l wo men with incom e- genera ting
opportunities. This research study examines this marketing
initiative as a case where corporate societal objectives are
helping achieve business goals. In present situation not only
in one industry but also all sectors are facing tough
competition. It has become very difficult to grow, stabilize
and excel in business performance. Over and above,
business environment is changing drastically. It is very
difficult to predict about future. High degree of risk is
involved in it. Sincere and dedicated efforts are needed in
marketing to retain the existing customers and attract the
new customers. It is required to influence the attitude and
behavior of buyers. A lot of promotional activates are
needed.
Altius Shodh Journal of Management and Commerce
ISSN 2348 – 8891
Interpretation: At 66% times adopt it always condition
but 34% in sometimes.
Objectives:
•
The main objective of this study is to find out the steps
Hindustan Unilever Ltd. is adopting in order to be market
leader and to differentiate itself from its competitors.
•
•
•
•
To study the marketing strategies of HUL.
2.
Which is the best media for the promotion of
your product?
Table 2: Best Media for Promotion
To focus on product mix of HUL.
Electronic Media
22%
To focus on competitive strategies of HUL.
Print Media
37%
To know the market and competitors of HUL.
Face to Face Communication
29%
Any Other
12%
Research Methodology:
Variables to be used: 100
Source: Primary Data
Sampling Design: Sampling is the selection of some part
of aggregate or totality on the basis of which a judgment
or inference about the aggregate or totality is made.
Interpretation: Print Media is highest (39%)
contributed for promotion of Product.
Sample Unit: All working people are include both the
genders i.e. males and females irrespective of their
education level.
Sample Region: Indore Region, M.P.
Tools for Data Collection: Data Collection was done in
two ways:
(1) Primary Data Collection
3.
(2) Secondary Data Collection
Primary Data has been collected through personal contact.
For this purpose questionnaires were administered to and
one-on-one interviews conducted with the consumers, shop
owners and distributors and suppliers of the company.
Secondary data has been collected from magazines,
newspaper, company literature and websites.
Tools for data Analysis: Analyzing codes to each question
were awarded. There after every questionnaire was written.
After which the data were analyzed. Tools of data analysis
will be used as per data collected.
Analysis and Interpretation of Results
1.
Do you adopt any mass communication strategy
to distribute your products?
How you grade your distribution channel?
Table3: Grade for Distribution Channel
Good
75%
Average
16%
Low
9%
Source: Primary Data
Interpretation: Our Distribution Channel is always in
Prompt position.
4. On what traits do you compare the services?
Table 4: Traits to Compare Services
Area Coverage
90%
After Sales Services
10%
Others
0%
Source: Primary Data
Prompt position.
Interpretation: In 90% cases compare the services on
the base of area coverage.
5. What are the promotional strategies you
adopt?
Table 5: Adopt Promotional Strategies
Table 1: Mass Communication Strategy
Always
66%
Rarely
0%
Sometimes
34%
Source: Primary Data
Buy one get one free
2%
Discount
33%
Free Coupons
39%
Any Other
26%
Source: Primary Data
Interpretation: For promotion of product, the company
adopts two major strategies - Free Coupons and Discounts.
6.
Do you regularly encourage or sponsored the
cultural events?
Table 6: Sponsored Cultural Events Regularly
Yes
80%
No
20%
Source : Primary Data
Source: Primary Data
Altius Shodh Journal of Management and Commerce
ISSN 2348 – 8891
Interpretation: Company always encourages cultural
events regularly.
Interpretation: For competing with others, our company
prepares to launch new products in the market.
7.
11. What is your primary strategy to become a
market leader?
Do you think a product survey is useful to your
company?
Table 7: Utility of Product Survey
Table 11: Primary Strategy to Become Market Leader
Yes
95%
Low Price High Quality
55%
No
5%
High Price Quality
15%
Low Price High Satisfaction
35%
Source : Primary Data
Interpretation: Survey of Product is help for Company
to make a better plan for Future.
8.
Do you distribute free samples to the end users?
Table 8: Distribute Free Sample
Yes
55%
No
5%
Occasionally
40%
Source : Primary Data
Interpretation: To become a market leader, the policy of
the company is to offer high quality products at a low price.
12. What is backbone to fight the competition?
Table 12: Backbone to Fight Competition
Source : Primary Data
Interpretation: Company provide Free Samples of
Large product Line
62%
Low Price of Products
29%
Product Mix
9%
Source : Primary Data
product majority when launch new product and for old
occasionally.
Interpretation: To face Competition Company produce
in large scale.
9.
Which type of strategies do you follow when
Findings
launching new products in the market?
•
Hindustan Unilever Ltd. (HUL) has reported a 24%
growth in net profit for the year 2014. This is due to
not only due to price increases but also strong sales of
premium products and one-time gains from sale of
property and reduction in liabilities related to retirement
benefits and restructuring costs.
•
Excluding the one-time gains, the company's net profit
rose 21%. HUL with revenues of Rs. 6284.75 crore
and a net profit of Rs. 1024.38 crore in the current
year.
•
HUL took judicious price hikes, cost-saving measures
and improvement product mix to offset rising input costs
which increased HUL margin.
•
Revenue from sales of soaps and detergents which
accounted for more than 48% of the company's total
revenues.
•
Revenue from beverages registered a 14% rise
although profits from this category fell by 19% due to
higher advertising spend on the segment.
•
Revenue from sales of processed foods is 49.68%
•
Personal care products, another important category,
23.69%.
•
The company also announced the launch of a range of
nutritional drinks and snacks for children, Kissan Amaze
Brainfood.
Table 9: Strategies to Launch New Product
Push Strategy
10%
Pull Strategy
80%
Discount
10%
Source : Primary Data
Interpretation: For launch any new product company
focus on Pull Strategy.
1.
When your competitor launches new products,
how do you face the situation?
Table 10: Face to Competition
Ready for the Competition with
62%
launching of new product
Wait for the response
10%
Decrease the price of the same
2%
category product
Differentiation Strategy
26%
Source : Primary Data
Altius Shodh Journal of Management and Commerce
•
•
HUL mainly focus on their objectives and how they
define it in success. Defining success is to make sure
that HLL can grow consistently, profitably and on grow
competitively.
HLL also changed their approach to marketing to the
rural poor. Because of widely varying levels of literacy
and access to television, HLL had to minimize its reliance
on traditional media channels and find ways to get its
message to consumers in a more personal, more direct
way.
Suggestions:
•
In the personal and home care industry, low brand
awareness has a very negative impact on organized
players. The organized players exploit this lacuna to
push spurious products.
•
Most give higher margins to the retailer, who is the
most expensive and important link in the supply chain.
Consumer product companies are said to lose between
10-35 percent of their business to fake products. To
tackle this problem, 14 FMCG companies have formed
a committee to fight counterfeit and local products.
•
Another concern is the surge in imports of toiletry
products in the unorganized market, which is eating
into the revenues of the organized players.
•
Industry sources say that these attractively priced
imports, which are flush with huge capacities. The size
of the unorganized imports is estimated between 1-3
bn. And growing annually at 10%.
•
However, domestic players plan to combat this threat
by strengthening their distribution networks, in which
the organized players have a distinct disadvantage.
•
Quantitative restrictions on 934 items were removed
through the 2012-13 Exim Policy. Products like sanitary
napkins, Toothbrushes, shaving brushes; copra will now
be freely imported. This is however unlikely to have a
material impact on the personal care companies as
import duties on most of these items are high.
Limitations:
Several limitations are occurred with doing survey and
making report. Here we desire my limitations which
occurred while preparing our report and survey includes -
•
Time
•
Large Product Line
•
Several Outlets
•
Busy schedule of officials and Executives
ISSN 2348 – 8891
Conclusion:
HLLs pioneering efforts to develop techniques to bring
branded products to India's rural poor gradually had an
impact on their entire portfolio of brands. Still, HLL also
looked to exploit other growth opportunities. In developing
a new salt product, HLL was hardly creating a new market.
In fact, the fascinating history of salt dates back many
centuries. HLL also wanted to minimize financial risk. By
partnering for manufacturing capacity and sharing
distribution assets with other HL products, the investment
in fixed assets for the new product was near zero.
Fragmentation in Indian media offered HLL the opportunity
to test the product incrementally. In the first few cities in
which they launched the product, HLL was gratified to
discover that they were successfully upgrading consumers
from unbranded to branded salts. Today they are a focused
on FMCG company with our branded business accounting
for over 905 of sales, consisting of 41 brands across 22
categories. In foods, there is enormous growth potential in
leading the evolution of consumers to branded and
processed foods. They have consolidated their portfolio and
improved the gross margins by over 16% through product
mix and cost reduction.
As the largest FMCG player it was up to them reverse the
downgrading to realize its true growth potential. Over the
next 15 years, per capita income in India is likely to touch
China's current levels. At those levels, the FMCG market
will be over Rs. 1.48 lakhs crore from current value of Rs.
96000 crores. Their main challenges were to reverse the
downgrading in the categories and reestablish the relevance
of their brands in the mind of the consumer. In 2013, they
had 168 brands, many undifferentiated and lacking scale.
They chose to focus on 41 power brands covering all
consumer appeal and price segments. The first step was
to ensure that they offer world class quality and real
differentiation backed by technology to give them the
advantages over low priced competition. They have invested
over Rs. 1300 crores, or 7.5% of sales, in the last four
years to upgrade the brands. Perhaps the most significant
change has been to move the brand beyond merely making
functional claims to plying a bigger and deeper role in the
lives of consumers. Today Lifebuoy, their oldest brand, has
grown at over 18% for the last benefit of 'great clean' by
saving two buckets of water with every wash. Their brands
and sound understanding of the local consumer are
supported by a world class Research and Development
capability. They have over 450 of the brightest scientists
and technologists based in India.
Hindustan Lever has historically had a strong bond with its
customers. This is possible because of IT connectivity across
the extended supply chain of about 3500 suppliers, 190
factories and 8500 stockiest. Their entry into Water Purifiers,
through Purest, shows great promise. At 17 paise per liter,
it is extremely affordable for the common man. They have
restructured the company, integrating eight profit centers
into two Divisions-Home and Personal Care (HPC) and Foods.
To ensure that Hindustan Lever remains competitive in the
long-term, they have made significant investments in
product quality, pricing and marketing. Recently an
international competitor attacked their laundry business led
Altius Shodh Journal of Management and Commerce
by a price reduction of as much as 50%. In recent years,
the FMCG sector declined due to down trading. Also because
of presence of large number of companies trying to seize
this opportunity, this force the old HLL for the change and
thus, their transformation has resulted in a new HLL which
has successfully faced this challenge and reversed this
trend. The new Hindustan Lever sees an exciting opportunity
for growth. They have 41 powerful brands covering all
segments, with leading market positions in most. Today,
these are stronger and more relevant to the consumer than
ever. The people are energized by the scale of the
opportunity and determined to seize it. The scale of the
business and operations gives them the resources needed.
They are delivering good services and the changes they
brought in the products are well taken by the customers,
by this they are generating sustainable profitable growth.
ISSN 2348 – 8891
References:
Books
1.
Kothari, C.R. (2013). Research Methodology, Wishwa
Prakashan, India
2.
Marketing Management (2014), ICFAI University Press
3.
Mamoria, C.B. (2012). Research Methodology
4.
Desai Vasant (2012). Rural Development in India ,
Himalaya Publishing House
Web Sources:
1.
http://www.fmcg.com
2.
http://www.ruralmart.com
3.
http://marketwatch.com